Frugaling

Save more, live well, give generously

What is the Innovative Finance ISA?

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You are probably already familiar with the traditional Individual Savings Account, or ISA, that allows you to save up to £20,000 TAX FREE for the 2017/2018 financial year.
ISA allowances are usually going up or remaining the same, so this is a great opportunity to grow a nest egg without paying any taxes.
Up until now, you had two options, the cash ISA, where you would usually get good interest rates for the first year, and then have to move it to another provider, and the stock and shares ISA.
In the context of tax free saving, it made more sense to get your stocks and shares away from the taxman, rather than a 1% saving account.
Now, a new category of ISA is available. It is called the Innovative Finance ISA, of IFISA, and allows you to put your peer-to-peer lending investments in a safe tax free scheme.
You can invest all of your 2017/2018 allowance into the IFISA, and you can also use the capital you have in cash or stock and shares ISA from previous tax years and transfer it into an IFISA.
Find out more about Innovative Finance ISAs with that infographic, courtesy of Lending Works.

ISA_Infographic (1)

Getting Car Finance With An IVA

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car finance iva

When you’re struggling with problem debt, taking on more credit is probably the last thing you want, and yet sometimes circumstances demand it. There are around 45 million drivers in the UK, using their vehicles for commuting, family matters, travel, leisure and much more. Cars are an essential part of our lives, but not cheap – so what do we do if we need to get a new vehicle but have an IVA.

An Individual Voluntary Agreement is an agreement arranged by an insolvency practitioner, between someone who owes debt and their creditors. It allows them to pay some or all of their debt via monthly payments, the scale of which must be agreed by at least 75% (in value) of creditors. This arrangement is legally binding, and formulated based upon the person’s financial status including income and outgoings.

An IVA affects your credit rating, and as such might normally lessen your chances of purchasing anything on finance. However, insolvency practitioners (and creditors) recognise that a car is mandatory for many, as without a means of transport many of us will not be able to get to work, and therefore won’t be able to pay our IVA. Therefore, you should be able to find a vehicle that is reliable and practical enough to allow you to live your life and continue to work off the debts.

The probable route is this; let’s assume that you have had an IVA for six months, and need a car. Your first port of call could be your insolvency practitioner, who will assess your current arrangements and see if there is scope for you to apply for finance and perhaps, just as importantly, the amount of money you could realistically spend per month.

Alternatively, you might first contact a car finance company that specialises in those with bad credit and IVAs, to see what is realistic for their circumstances. It’s then a case of marrying up the two parts of the puzzle, and finding a solution. There are tens of thousands of cars available nationwide for those who have IVAs, so the applicant should not feel unique or embarrassed.

IVA agreements are there to allow you, where possible, to free up your debt and keep your home, while also salvaging some of the money that you owe your debtors. There is a level of strictness involved, so it would not pay to try to get finance without adhering to the conditions.

If you need a car and do not possess the immediate funds to purchase one, getting support from your insolvency practitioner could be the next best step in both securing the vehicle but also continuing to pay off your debts – and eventually enjoy life debt-free.

Who’s Responsible For Poverty?

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Banksy I Hate Mondays Art
Art: Banksy

Picture this: a dirtied, scraped up, penniless homeless man holds up a cardboard sign pleading for pocket change. Perhaps he wrote well wishes and a message of gratitude for giving what you can. Most people who pass him don’t know where he’s from, his name, or how he came to be homeless.

As humans, we tend to fill in the blanks. Unless you’re chauffeured from a gated community to a private jet, and refuse to look out the window in daily travels, it’s nearly impossible to miss these questions of responsibility. We tend to explain the inexplicable with simplifications. People deserve what they deserve.

These mental shortcuts enable us to quickly pass through our day and “understand” the world around us. It’s complicated out there, and we have limited brain power. We can’t worry about everything, can we? Dwelling on uncertain ideas of responsibility might result in something scary: feeling lost, stupid, or flirting with pointlessness.

When we think of the causes of poverty, it can be natural to blame individuals. For instance, that the person asking for change on the street corner is too lazy to work, wants to feed their alcohol addiction, and/or doesn’t care to shape up. If only they would take responsibility for their actions, then they wouldn’t be homeless, right?

That’s the simple conclusion — and it’s possible — but today I want to encourage us to take a step back. Let’s think about some alternative conclusions. Those alternative conclusions harbor a truth that’s larger than one simplistic answer. It encapsulates the range of possibilities and diversity of lives.

Capitalism tends to encourage individual responsibility for actions. We have a penal system that punishes individuals’ actions as if they are divorced from difficult upbringings and environments — separate and isolated incidents. We have enormous financial markets, which encourage individual college students to major in business, computer science, and engineering. We congratulate and honor people for “their” work and individual contributions to science, politics, and bravery. When we seek answers for homelessness, poverty, and even wealth, the scripts have been built for us. As I’m a visual person, I’ve created a pie chart to explain responsibility in capitalism.

Pie chart 1

In this first chart, capitalist ideals suggest that individuals bear the responsibility. Pretty simple, right? When I was younger, I enjoyed the efficiency of more libertarian — individual responsibility — principles. If you work harder, you’re rewarded. The world is yours, if you earn it.

Those capitalism-infused libertarian values of responsibility eventually shifted. The best explanation was an active decision to expose myself to diverse reading material and cultures. Suddenly, the responsibility for homelessness, poverty, and wealth became complicated ideas. I needed to wrap my head around the chicken or the egg — what came first — of finance. Did the poverty cause lethargy or did laziness cause poverty?

Pie chart 2

Obviously, these pie charts aren’t scientifically exact. They’re meant to be illustrations of my thought process, as I consider where to assign blame and responsibility when I see poverty and wealth. The more I thought about what might influence and shape an individual, the more complicated it became. Certainly, it would save me time to write off the impoverished and say they are welfare grubbing lifesucks, but I choose to represent a different point of view. We are each born into this world with different characteristics — monetary, racial, SES, etc.

Pie chart 3

If we reexamine the aforementioned homeless man, responsibility becomes murkier with new variables. Suddenly, we see the man beyond the exterior and our previous assumptions. Perhaps the reality is that he was born to a single-parent household in a disenfranchised neighborhood. Perhaps he was a Vietnam War veteran who suffered from the losses of fellow soldiers and improperly/untreated posttraumatic stress disorder.

Or, perhaps we are all incredibly complex, diverse beings. We’re born with unique genes, environmental upbringings, educational opportunities, and parents. Heck, those listed here are but a small fraction of all the variables we could include.

If we quickly judge that someone bears the responsibility for being destitute, we are the lazy ones. We are the ones we often hate, despise, and discount. Carefully examining responsibility is challenging and not without errors, but we avoid incorrectly concluding that someone failed and deserves the punishment of poverty.

I Have Zero Business Degrees

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My Graduation Day 2011

What are my credentials?

Frugaling is a personal finance website where I regularly talk about financial concerns. I provide advice to save and make money, editorialize social justice issues, and argue in favor of minimalism over consumption.

But you might be wondering what credentials I have to proffer this help. Well, that’s a funny thing: I don’t have any. I didn’t get a business-related degree — there’s no formal finance education or economics indoctrination. My words are informed by something greater, and my hope is that they’re not the rote, memorized drivel that many financial advisors spout.

As a kid, I always thought I’d pursue something in finance. In fact, I want to tell you a little story from high school. It was there that I decided that to pursue a financial career path would leave me deeply unsatisfied, but my passion for personal finance never stopped.

Sam, you’re on the line!

I was giddy, but tempered in my high school science course. In about 10 minutes I’d ask my teacher to step outside and make a phone call.

My battery was fully charged, but I had to find a better signal. There was a field, away from the building, that provided a comfortable amount of strength. I dialed the number; I believe it was somewhere in New Jersey. I stayed on the line for what seemed like an abominable amount of time.

Occasionally, a pre-recorded voice piped up, that encouraged me to stay on the line. Then, I heard Jim Cramer’s — host of Mad Money on CNBC — voice and he shouted in my ear, “Sam from Golden, Colorado…” I melted with nervousness, but miraculously stated a ticker symbol (which I cannot remember) for a stock I was interested in.

Stocks were more important than classes

My latter high school days were filled with these moments. While fellow students studied diligently for their ACTs and applied to elite schools such as Duke and Stanford, my time was spent reading, trading, and watching the stock market. Because I was under 18, I forced my mom to co-sign and create a custodial account on an online trading site. I was hooked, and I loved the adrenaline.

Numbers pulsed through me, and I would binge on stock charts for hours. I hogged library computers and printer time to map them. In hallways and breaks, I drew lines on the charts, and practiced what I saw in books and television.

As an autodidact, the stock market provided an endless supply of data to be analyzed and understood. And the spoils went to the most educated people. I wanted to be one of them.

One form changed my degree, life

College was the path I was expected to follow. While my parents and grandparents never “forced” that path, it was strongly encouraged. The university life was where people went from good to great. I was open to that potential.

I applied to two colleges. The one I wanted to go to, Colorado State University, accepted me, but didn’t directly admit me into business. My less-than-stellar grades and contempt of mathematics meant that I would be an “open-option” business student until I proved my competence via good grades.

Prior to departing for Colorado State, there was an open house session. I attended one event geared specifically towards open-option students. For one hour, an advisor talked about academic success and finding your purpose in college.

I remember rolling my eyes, as the cynic in me dreaded the activity to come. We were split up into groups and then given about 10 minutes to complete a form and talk among the members.

The form asked us some simple questions, but one stuck out; it read, “How would you use your degree?” Despite the stupidly simple question, I had not really thought about this question before. I saw a response, “I want to help others.” Then I thought about my business degree — something wasn’t quite right.

I went to my advisor as soon as school started and asked to switch to psychology. There, I envisioned being able to listen and talk with others through their problems. That would be a degree to “help others.”

The psychology of money, spending, and society

After undergrad, I applied to graduate school and got into a counseling psychology doctoral program at the University of Iowa. I still wanted to follow the goals set forth in that open-option day. But in the back of my mind I recognized that investing and money issues still held great interest.

I still invested and read everything I could get my hands on regarding the stock market and business. I changed career paths, but my intrinsic passion for personal finance lingered.

As my own debt and spending spiralled out of control, I started Frugaling to right my course. It worked. I paid off about $40,000 of debt in about a year. I completely revamped my life — now incompatible with wanton spending and extravagances.

But I also started Frugaling as a perfect combination to meld my converging interests. I found that people’s (me included) monetary issues were closely linked to psychological concerns, distress, and stressors.

Psychology and business weren’t divergent topics. Additionally, I realized that most financial gurus blamed personal responsibility and character flaws on poverty, bankruptcy, and inadequate financial planning. There was room for a different voice — informed by psychological concepts and real counseling work with people suffering.

I’m not a financial-affiliated spokesperson

Over the nearly two years that Frugaling has been around, I have become an increasingly more passionate advocate for the underdogs. Financial markets are deeply unforgiving and unequal. People need to stand up and help others across diverse, multicultural backgrounds.

I ask you not to trust me for my financial degrees and letters after my name. I ask you not to trust me for how much money I’ve made for other people. I ask you not to trust me for being personally wealthy. I ask you not to trust me for my reputation (or lack thereof).

All I ask is that you consider the possibility that financial voices of reason come from those outside that insular world. I’m here to stand up for those who’ve been drowned out for too long. And I’m excited to continue building an audience (you included) that is inspired into action over social justice concerns and reducing consumption.

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